Responsible Investor

It takes more than money to grow a sustainable business.

Norfund is contributing to the achievement of the UN’s Sustainable Development Goals (SDGs) by promoting investments that support sustainable development. We focus particularly on economic, social, and environmental development goals.

Norfund adds value by helping our investees to achieve high standards of governance and strong environmental and social performance. We believe that high Environmental, Social and Governance (ESG) standards are prerequisites for succeeding at delivering on our mandate.

Business integrity

Norfund requires high standards of business integrity from employees and business partners and communicated our no-tolerance approach to all stakeholders.

Corruption and economic crime have wide-ranging negative effects on societies, and are detrimental to reach the United Nation’s Sustainable Development Goals (SDGs). Norfund has a “zero-tolerance approach” to corruption, money laundering and any form of economic crime. Furthermore we are committed to promoting integrity, transparency and accountability in all our investments.

We require the companies we invest in, our business partners and our employees to promote and adhere to high standards, including:

Environment and society

High environmental and social (E&S) standards add value to projects and to local communities, as well as enhance business opportunities. Therefore, managing E&S risks is an integral part of Norfund’s investment process.

During appraisal, Norfund assesses E&S risks related to the investment. Effective E&S due diligence reduces risks to:

  • workers
  • the environment
  • local communities
  • other stakeholders

Norfund also evaluates the capability to manage E&S risks of those involved in the project. This includes the project partner, the project company and when we invest through funds, the fund manager.

In many of the countries in which we invest, employment and environmental laws, rules and protections may be poorly implemented. Protections for vulnerable populations may also be weak.

ESG Policy

Norfund’s ESG policy describes the sustainability commitments of Norfund when we finance projects and how we commit the companies we invest in to responsible business practices.

IFC Performance Standards

The environmental and social standards of the World Bank’s International Finance corporation (IFC) provide a basis for all assessments Norfund makes before and during the investment process. The IFC Performance Standards are globally recognised benchmarks for environmental and social risk management in the private sector. The standards are used by development finance institutions, commercial banks and other similar institutions. They cover the following aspects:

Environmental and social responsibility is critically important in today’s global economy. An environmental and social management system (ESMS) helps companies integrate plans and standards into their core operations—so they can anticipate environmental and social risks posed by their business activities and avoid, minimize, and compensate for such impacts as necessary. A good management system provides for consultation with stakeholders and a means for complaints from workers and local communities to be addressed.

For any business, its workforce is its most valuable asset. A sound worker-management relationship is key to the success of any enterprise. Performance standard 2 asks that companies treat their workers fairly, provide safe and healthy working conditions, avoid the use of child or forced labor, and identify risks in their primary supply chain.

Industrial activity and urbanization can increase levels of pollution that may threaten people’s health and the environment. PS3 guides companies to integrate practices and technologies that promote energy efficiency, use resources—including energy and water—sustainable, and reduce greenhouse gas emissions.

Business activities and infrastructure projects may expose local communities to increased risks and adverse impacts related to worksite accidents, hazardous materials, spread of diseases, or interactions with private security personnel. PS4 helps companies adopt responsible practices to reduce such risks including through emergency preparedness and response, security force management, and design safety measures.

When companies seek to acquire land for their business activities, it can lead to relocation and loss of shelter or livelihoods for communities or individual households. Involuntary resettlement occurs when affected people do not have the right to refuse land acquisition and are displaced, which may result in long-term hardship and impoverishment as well as social stress. PS5 advises companies to avoid involuntary resettlement wherever possible and to minimize its impact on those displaced through mitigation measures such as fair compensation and improvements to and living conditions. Active community engagement throughout the process is essential.

Biodiversity loss can result in critical reductions in the resources provided by the earth’s ecosystems, which contribute to economic prosperity and human development. This is especially relevant in developing countries where natural resource-based livelihoods are often prevalent. PS6 recognizes that protecting and conserving biodiversity, maintaining ecosystem services, and managing living natural resources adequately are fundamental to sustainable development.

Indigenous peoples (IPs) may be particularly vulnerable to the adverse impacts associated with project development, including risk of impoverishment and loss of identity, culture, and natural resource-based livelihoods. PS7 seeks to ensure that business activities minimize negative impacts, foster respect for human rights, dignity and culture of indigenous populations, and promote development benefits in culturally appropriate ways. Informed consultation and participation with IPs throughout the project process is a core requirement and may include Free, Prior and Informed Consent under certain circumstances.

Cultural heritage encompasses properties and sites of archaeological, historical, cultural, artistic, and religious significance. It also refers to unique environmental features and cultural knowledge, as well as intangible forms of culture embodying traditional lifestyles that should be preserved for current and future generations. PS8 aims to guide companies in protecting cultural heritage from adverse impacts of project activities and supporting its preservation. It also promotes the equitable sharing of benefits from the use of cultural heritage.

Corporate governance

Good corporate governance is essential for us to achieve financial, sustainability and development goals. It refers to the structures and processes for the direction and control of companies. Corporate governance matters because it improves investment companies’ performance and helps develop capital markets. Sound corporate governance adds value to investments, and reduces the risks for investors.


Norfund’s approach to net zero 

Climate change poses a significant threat to global development, disproportionately impacting developing countries. Norfund committed to the EDFI statement on climate and energy in 2020, which includes aligning the portfolio with a pathway towards net zero. In 2024 we decided on a Net Zero strategy for Norfund for the years 2024-2030 that applies to both the development and climate mandate. It focuses on ambitions and actions Norfund will apply in the short- and medium term. Norfund’s approach is iterative, where we take action now and revise as needed. 

Norfund will contribute to the transition to net zero in developing countries through four main elements:

Investing in projects and companies that contribute to mitigating or adapting to climate change is key to ensure sustainable development. Norfund aims to step-up annual investments in climate finance and seeks to invest in climate projects across all investment areas.  

Several hard-to-abate sectors are essential for continued development in the markets we operate in. Thus, investing in emission reduction initiatives in such sectors is crucial to balance decarbonization and development. Norfund will seek to apply decarbonization measures for individual investments in portfolio, with a particular focus on hard-to-abate sectors that are key to development (“transition finance”).  

Norfund has committed to aligning all new investment with the objectives of the Paris Agreement and we do that through the harmonized EDFI approach, categorizing them as either automatically aligned, misaligned, or conditionally aligned with the Paris goals. By adopting this methodology, we strive to support our investees in the transition to net zero, minimize transition risks and avoid stranded assets, ensuring our portfolio supports a sustainable and climate-resilient future. Read more about our methodology here.  

Transitioning away from fossil fuels in energy systems is essential to limit emissions. Norfund has low direct exposure to fossil fuels.

Institutions (EDFI) have identified particular sectors and activities in which we do not invest. The EDFI Fossil Exclusion List provides an overview of these. In addition to this list, Norfund has further strengthened its approach to fossil fuels with the Norfund Fossil Fuel Standard.  

Norfund’s responsible tax policy

Norfund recognizes that tax receipts are fundamental to the ability of governments in developing countries to fund infrastructure and public spending and stimulate sustainable development. As a responsible investor, Norfund supports prudent transparent tax behaviors.

Business Support

The Business Support facility is an important instrument in exercising active ownership and creating value add through technical assistance and grants.

The main objective of the Business Support Program is to strengthen the development effects of our investment activities and create value additionality. The facility also seeks to support our investments on cross-cutting issues as climate and environment (SDG 13), gender equality (SDG 5), human rights (SDG 16) and anti-corruption.

This facility is earmarked Norfund’s portfolio companies and potential portfolio companies. For this grant-based financing, portfolio companies take up to 50% of the project costs.

Read more about Business Support here.

Frontier Facility

Projects involved with a higher level of risk than other investments in Norfund’s core portfolio are managed as a separate fund, called the Frontier Facility. These investments primarily include fragile states and Least Developed Countries (LDCs).

The facility serves two purposes:

  • Enabling early phase project development within Norfund’s investment areas
  • Risk mitigation for commercial investors that wish to invest in Norfund funded projects, throughout the project cycle

This facility enables Norfund to undertake higher risks in early-stage project development, while also reducing the exposure for commercial investors in the most demanding markets with scarce access to risk capital.

Norfund leverages this fund to invest in promising project development, by providing loans that can later be converted into equity if the project can be matured and is ready for investment. However, the projects are not included in Norfund’s overall portfolio valuation.

Cross cutting issues

The cross-cutting issues in Norway’s development policy – human rights (SDG 8), anti-corruption (SDG 16), gender equality (SDG 5), climate and environment (SDG 13) – are assessed in all our investments.


The climate crisis disproportionally affects poor people in developing countries and is a major threat to the goal of eradicating poverty.

Read more about Norfund’s work with climate and environment here.

Gender Equality

Norfund is committed to addressing gender equality in our own organisation as well as in our investments. We use active ownership to promote equal opportunities for men and women across all levels in our investee companies.

Read more about Norfund’s work with gender in the Annual Report here.

Human Rights

The responsibility to respect hu­man rights is a global standard of expected conduct for businesses and their responsibility as employers worldwide (SDG 8.7). As Norfund’s role is to contribute to building sus­tainable businesses, we require our investees to respect human rights by adhering to the IFC Performance Standards. These standards cover relevant parts of the Declaration of Human Rights and the UN Guiding Principles on Business and Human Rights – such as the core conventions of the International Labour Organisation (ILO) and indige­nous peoples’ rights. You can read more about this under E&S in the Annual Report.


Norfund has zero tolerance for corruption in all its investments and activities. We make clear to our portfolio companies that we do not accept any form of corruption and require them to implement anti-corruption programmes. All Norfund employees and representatives (in­cluding external board members appointed to portfolio com­panies) are required to sign and abide by Norfund’s Code of Conduct, which prohibits all forms of corruption. If financial irregularities or corruption are suspected, Norfund has a for­mal channel to support whistle-blowers.

Read more about this under Governance and Business Integrity in the Annual Report.